Michael Gentile and Independent Stationers battle big-box stores using native power

 

If conventional business thinking prevailed, Michael Gentile’s life might be very different than it is today. Instead of marking his 10th anniversary as president and CEO of Independent Stationers Inc. in January, the head of this member-owned office products dealer cooperative might still be teaching elementary school.

“Ten years ago, many predicted that the independent dealer would become extinct,” Gentile says. “Today, independent dealers are stronger than they were 10 years ago and are gaining market share versus the big-box competitors.”

They’ve been able to push back, he says, by carefully leveraging the $2.5 billion in buying power IS wields on top of the local market strength possessed by its member companies.

The power of local

While IS lays claim to more than 400 independent members across the U.S., Gentile says the real power the cooperative exercises lies in the local nature of its members’ businesses. He says big-box competitors grossly underestimated the entrepreneurial nature and resiliency of the independent dealer.

“They did not value and respect the power of local,” he says. “Here in the U.S. today, as in Europe, people value doing business locally. They want to create jobs locally. They want to keep tax dollars in their local community. They recognize that the people who work in local businesses send their kids to their schools and participate in all their community programs. They go to church and the chamber of commerce together. They want to do business locally.”

And it’s local, independent business people, he says, who have been growing and adding jobs in spite of a challenging economy that remains tight when it comes to capital for small business.

“Big boxes are all struggling for relevancy,” Gentile says. They can’t close retail stores fast enough to stop the bleeding and it has added pressure to us because we need to adapt and accelerate our own technology so we can meet the demands that are being placed on us.”

Gentile says IS offers its members an extensive range of business products and services that deliver market capabilities and efficiencies similar to what its major retailer competitors are able to do for themselves.

“We just don’t have the albatross of retail breathing down our necks like they do, and we don’t have Wall Street breathing down our necks either,” he says. “We work collaboratively with all our industry partners to try to provide the needed resources for dealers to grow and compete.”

But pressures from the likes of Staples and Office Depot aren’t the only threats IS faces each day. Online-only retailers such as Amazon and mass merchandisers like Wal-Mart and Target have made significant inroads into turf once served almost exclusively by local independent office supply dealers.

“The term we use is the Amification of our industry. Everything is becoming Amazon or Wal-Mart,” Gentile says.
As a result, he says the industry’s familiar retail sales model could be on its last legs.

“Staples and Office Depot are the only two big boxes left standing and they are struggling for relevancy,” Gentile says. “Staples share price is down 17 percent from where it was last year, they’ve lost hundreds of millions of dollars of market capitalization and they are quickly realizing that retail is dead and they need to redefine themselves.”

Meanwhile, he says the landscape continues to change beneath them and IS and its members continue to move ahead as the broader sector endures “massive consolidation, restructuring and a refining of its go-to-market strategy.”

He acknowledges those changes have reduced the number of independent dealers IS represents. Those that remain, however, are more successful and have significantly increased their revenues, due at least in part to the advantages IS offers in boosting their long-term competitiveness, he says.

“Not many people predicted that cycle. In fact, they predicted the opposite,” he says, adding that IS members’ independence, resilience and adaptability have been “grossly underestimated” by the competition.

To grow and prosper, he says, IS had to evolve from being a traditional buying group into becoming a dealer services group. Under Gentile, IS moved its dealer members beyond their traditional retail trappings, reaching into previously unexplored territory that now includes such product categories as facility, break room, industrial, medical, safety and school supplies, among others.

Gentile and his board of directors, which comprises senior executives from nine member companies, work in concert to guide and support their membership through what has clearly become an ongoing transformation process. As the senior executive of a cooperative, he faces a set of challenges unique to his position at the head of a group composed of more than 400 other senior executives, each a leader in their own right.

On managing managers

According to Gentile, the good thing about running IS is that all its member companies are owned and operated by independent, entrepreneurial business people with strong connections to their local markets.

However, he cautions, “At the same time, the most challenging thing is they’re all independent and entrepreneurial.